Case Summary (G.R. No. 117609)
Factual Background and Title Issues
The property in dispute is a 1,381.1 square meter lot along Quezon Boulevard, Quezon City, originally titled in the name of Severa Gregorio. Severa leased the property to Shell company for twenty years beginning in 1965. After her death in 1976, her heirs discovered that their title had been cancelled and replaced by a new certificate of title (TCT No. 349788) registered in the names of spouses Wilson and Benita Tan. The spouses acquired the property through two transactions: (1) a purchase of 2/3 interest from Ricardo Santos, who allegedly obtained title from Severa via an alleged 1971 deed of sale, and (2) a purchase of 1/3 interest assigned by spouses Felicisimo and Rosalina Palomo, who obtained the share in a judicial sale.
Destruction of Evidence and Reconstitution of Records
A major complication arose when in 1988 a fire gutted the Quezon City Hall Building, destroying key original documents, including the original deeds and the new title in respondents’ names. The trial court ordered reconstitution of records in 1989. The heirs subsequently filed a supplemental complaint challenging the authenticity of the 1971 deed of sale allegedly executed by Severa Gregorio, specifically asserting that the signature was forged.
Trial Court’s Findings and Reliefs Granted
The Regional Trial Court (RTC) ruled in favor of the heirs, declaring the July 14, 1971 deed of sale and the subsequent deed by Ricardo Santos to spouses Tan null and void for being forged, while validating the assignment from the Palomos to the spouses Tan covering the remaining 1/3 portion. The RTC ordered cancellation of the titles in favor of respondents and reinstatement of the original certificate in Severa Gregorio's name. The court also imposed damages and attorney’s fees and ordered reimbursement related to payment of purchase price and taxes.
Court of Appeals Reversal
Both parties appealed. The Court of Appeals (CA) reversed the RTC, declaring ownership and title of spouses Tan over the entire property valid. The CA held that the spouses Tan were innocent purchasers for value in good faith, relying on the presumption of validity of Torrens title and the lack of convincing evidence of bad faith. The CA also discounted the NBI handwriting expert’s testimony due to the reliance on xerox copies rather than the original deed, which was destroyed in the fire.
Issues on Appeal to the Supreme Court
The heirs raised two principal errors before the Supreme Court:
A. The CA improperly disregarded the NBI handwriting expert’s testimony indicating the 1971 deed of sale was forged.
B. The CA erred in declaring spouses Tan as innocent purchasers in good faith.
The validity of the Palomos’ assignment of 1/3 undivided share was not contested in this appeal.
Analysis on Handwriting Expert Testimony and Best Evidence Rule
The Supreme Court affirmed the CA’s rejection of the handwriting expert’s testimony, emphasizing the best evidence rule under the Rules of Court. Only the original document may be used as evidence of its contents unless exceptions are met. The original deed was destroyed by fire, necessitating reliance upon certified xerox copies in court, which is insufficient for establishing forgery in light of the need for a reliable signature comparison. The Court cited precedents that forged signatures must be proven with clear, convincing evidence, which requires comparison of the questioned signature with genuine samples, which cannot be properly made from photocopies.
Additionally, while expert testimony in questioned documents is helpful, the Court reiterates the judge’s independent duty to evaluate the authenticity of signatures. Without the original deed, no definitive conclusion of forgery could be made.
The Presumption of Good Faith and Innocent Purchaser Doctrine
Under the Torrens system, ownership rights are protected by the presumption of good faith on the part of the transferee of registered land. Good faith exists when acquisition is without notice of competing claims or defects, and the purchase is for full value.
Here, spouses Tan conducted due diligence by verifying the title's status with the Registry of Deeds and had legal counsel advise them before purchase. The title they relied upon was free of encumbrances except for the 1/3 share held by the Palomos, whose acquisition and assignment had judicial approval. No evidence of fraud, bad faith, or negligence was found against spouses Tan.
The burden to prove bad faith rested upon
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Case Syllabus (G.R. No. 117609)
Background and Procedural History
- This case is an appeal by petition for review on certiorari contesting the Court of Appeals decision which reversed the Regional Trial Court (RTC) of Quezon City Branch 79.
- The RTC had nullified and declared a Deed of Absolute Sale dated July 14, 1971, purportedly executed by Severa Gregorio, as falsified, fictitious, and forged.
- Defendant spouses Wilson Tan and Benita Lui Tan were adjudged as purchasers in bad faith.
- The Court of Appeals reversed the RTC’s ruling, holding spouses Tan as innocent purchasers and confirming the validity of their title over the disputed property.
- The heirs of Severa Gregorio now allege errors committed by the Court of Appeals and seek the reinstatement of the RTC decision.
Facts of the Case
- The subject property is a 1,381.1 sqm lot along Quezon Blvd., Quezon City, initially covered by TCT No. 8787 issued to Severa Gregorio in 1949.
- Spouses Wilson Tan and Benita Lui Tan are registered owners of the lot under TCT No. 349788, issued after cancellation of the original TCT No. 8787.
- In 1965, Severa Gregorio leased the lot to Shell Company for twenty years.
- Severa died intestate on September 20, 1976, survived by three legitimate children: Buenconsejo Vivar, Jesusa Galang, and Cecilio Pineda.
- After Cecilia's death in 1982, in 1986, Buenconsejo Vivar attempted to sell the lot and discovered through certified copies that TCT No. 8787 was cancelled and replaced with TCT No. 349788 in favor of spouses Tan.
- Document trail showed:
- Sale of 2/3 portion from Severa Gregorio to Ricardo Santos dated July 14, 1971.
- Sale of same 2/3 portion from Santos to spouses Tan dated September 17, 1986.
- Legal acquisition by the Palomos of 1/3 undivided share via court execution sale in 1978 and subsequent assignment to spouses Tan on September 18, 1986.
- The challenged deeds and titles were recorded in the Quezon City Registry of Deeds, effecting ownership transfer.
- The heirs sued for cancellation/reconveyance alleging forgery of deed of sale executed by Severa Gregorio.
Trial Court Proceedings and Decision
- The original case records and key documents were destroyed in a June 11, 1988 fire at the Quezon City Hall Building.
- The trial court ordered reconstitution of the records.
- Heirs filed an amended complaint centered on the alleged forgery of Severa Gregorio’s signature on the 1971 deed of sale.
- Evidence included testimony by NBI handwriting expert Bienvenido Albacea, who concluded the signature on the 1971 deed was forged based on examination of the original document before the fire.
- Spouses Tan denied allegations, asserting good faith purchase and genuine documents.
- Trial court ruled:
- Deeds of sale between Severa Gregorio and Santos and between Santos and spouses Tan were null and void ab initio as forged.
- The deed of assignment from Palomos to spouses Tan for the 1/3 undivided portion was declared valid.
- Titles in the names of spouses Tan and Ricardo Santos were cancelled.
- TCT No. 8787 in the name of Severa Gregorio was reinstated.
- Santos was ordered to reimburse spouses Tan the purchase price and additional damages.
- Plaintiffs were ordered to reimburse spous